What Is Environmental Industry Analysis?

To study and analyze an industry, we must first look at the factors that affect the development of the industry. Here we use the vertical pair analysis method to cut through the history of industry development to study and analyze the environment of industry development.

Industrial environmental analysis

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To study and analyze an industry, we must first look at the impact on the development of the industry

To study and analyze an industry, we must first look at the factors that affect the development of the industry. Here we use the vertical pair analysis method to cut through the history of industry development to study and analyze the environment of industry development. Since the development prospects of the industry are related to many factors, and according to different factors reflecting different classification standards, there are several common classification methods below.

According to the industry's future expectations, it can be divided into the sunrise industry and the sunset industry. For example, the biotechnology and information industries are both sunrise industries. The development prospects are bright. The so-called "tortuous roads and bright future." Maybe it will become a sunset industry. The steel and textile industries born in the 19th century are obvious sunset industries, and the future development prospects are not optimistic. The sunrise industry and the sunset industry have a certain relativity. In the developed capitalist countries, such as the microelectronics industry, which has just started in some developing countries, it is in the position of the sunrise industry. Therefore, developed capitalist countries often transfer domestic production technology and equipment to developing countries for the benefit of multinational corporations. Therefore, Chinese enterprises should also "introduce and go abroad." The imbalance in the development of China's economic regions and urban and rural areas may also lead to an imbalance in the development of industries. It has become a trend for emerging industries to shift from the east to the west and the cities to the countryside. Coupled with government policy support, it gives enterprises a healthy and healthy development environment. If the development strength of the enterprise is relatively weak and the competitiveness is not strong, why not transfer the development strategy of the enterprise to the west or take the "rural encirclement of the city" road in order to seek the long-term development of the enterprise.

According to the advanced level of technology used in the industry, it can be divided into emerging industries and traditional industries. Generally speaking, traditional industries are mostly sunset industries, and emerging industries are mostly sunrise industries. Because there are certain restrictions on the development cycle of the industry. From the birth, development, prosperity, and decline, the value of the development cycle of an industry is generally 120 years according to the traditional industry. According to the degree of industry's dependence on resources and technology, the cycle of the industry fluctuates, either long or short. Generally speaking, the greater the dependence on resources, the shorter the industry cycle, such as steel and textile industries; the greater the dependence on technology, the longer the industry cycle, such as biotechnology, space technology, etc.

Generally speaking, the emergence of an emerging industry does not foretell huge profits, because the market is relatively slow at this time, products are not necessarily accepted by consumers, and the market capacity is extremely small. For example, the computer industry in the 1950s had almost no People will buy computers. At the beginning of the development of the industry, the entry barrier is relatively low, especially in some labor and resource-intensive industries, such as textiles, where the market has less competitive pressure, and the company has a large profit margin, and it has not formed a standardized market order. period. When the company reaches a certain stage, the market will gradually become saturated and the industry will mature. Several integrations in the industry have formed a state of peaceful coexistence among enterprises. The product differentiation strategy has become a new development trend. Products have begun to be refined and personalized in order to meet the needs of different ages, ethnic groups, and consumer groups. This actually saves social costs and reduces waste of resources due to product surplus.

Price wars have ceased to be a major means of competition, and post-differentiation strategies are a sign of industry market maturity. At this time, due to the reduction of profit margins and cost constraints, the supplier system and sales network also tend to be stable without much change, and a stable quantity-price relationship will be formed between industry products and alternatives. Will cause the loss of too many consumers, and switch to other consumer goods. This kind of balance is relatively stable in the industry, and it is indeed unstable among enterprises. Generally, large enterprises are the developers of new technologies. The introduction of new technologies will break this equilibrium. In fact, if the development speed of an industry is significantly higher than that of other industries, the relationship between the quantity and price of alternatives will change, and consumers of alternatives will be attracted to this industry, including the transfer between countries. It will shift with it and produce a chain reaction of the whole society and even the whole world. For example, the computer industry has changed the global economic structure. Depending on the situation, promote or delay the development of other industries. Therefore, the British cotton textile industry has led to the rise of the British Empire for exactly this reason.

The development cycle (also known as the life cycle) of the industry is flexible. For the sake of simplicity, we take the development of the domestic appliance industry as an example. In the early 1980s, the Chinese home appliance market had just begun. The so-called market was lacking. As the pace of reform and opening up accelerated, Chinese home appliance companies were flourishing. The first thing to do was to establish a complete enterprise to seize the opportunity to occupy the market. "Preempting the site". At this time, market development is relatively easy, and government policies support the development of the industry with fewer restrictions. The industry division is still immature, and no positive competition within the industry can be formed. Only the undercurrent of enterprise development speed and the potential advantages of marketing network competition. Because the cost of searching and developing new markets is much smaller than the opportunity cost of competition within the industry, the new markets established are relatively stable, and the return on investment is higher. Famous companies of this period include Konka, TCL, Skyworth, Hisense, Lehua, Xoceco, and Panda. At this time, the main characteristic of the enterprise is to infinitely expand the production scale and create market capacity. However, the market has some space, which is limited. When the market is divided up. This virtually prevents other companies from entering the industry.

As the development of the industry matures, due to the company's unlimited pursuit of profits, companies will begin to seek external expansion in different ways and with their own advantages. Other companies will also have similar strategic tendencies, let alone wait. As a result, competition within the industry inevitably occurred. The merger war between major companies invading eastward and westward began. There may be only a few winners, or no winner. The color TV price war in the 1990s is a good example. This involves the strategy and tactics of the enterprise, and the strength and scale of different enterprises in the industry are different, resulting in different corporate strategic goals and survival concepts. For example, in 1998, Haier stabilized the domestic market and proposed an internationalization strategy in a timely manner. In the face of fierce competition in the same industry, the initial goal of Gree Air Conditioning at the same time was to base itself on domestic development, and finally to a prosperous situation. This is the time when consumers' quality consciousness begins to awaken. At this time, companies should not blindly expand the scale without paying attention to product quality and brand effects.

Entering the twenty-first century, especially after 2007, the home appliance industry has matured, and its performance characteristics are: 1. Market growth has slowed down, competition has become more intense, and it has reached the "small profit is a picture" situation. 2. The competition among enterprises is more about the competition of technology and cost, with more emphasis on cost advantages and service quality. 3. Market segmentation is no longer a simple regional division. The market division is more flat and hierarchical, and the products are more refined. 4. The industry's production capacity began to be excessive. 5. As the technology is more mature, the change is mainly the change of production and operation management mode. 6. Enterprises began to seek foreign markets, increasing international competition pressure, and greater impact on international trade barriers and prices. 7. The gradual decline in profitability is a long-term trend or a temporary phenomenon, and it is uncertain; 8. The profit of middlemen declines-the price negotiation ability increases. Therefore, the industry entry threshold during this period is exceptionally high, and other companies basically have no room to enter the industry. The competition in the home appliance industry is basically the competition between Haier, Hisense, TCL, Konka, Skyworth, and the two major sales networks Gome and Suning. Therefore, the development of an enterprise is inseparable from the changes in the industry market, but no matter how the changes are carried out, the law of the development cycle of the industry cannot be escaped. While attaching importance to micro-environment analysis, that is, self-analysis, enterprises must also pay attention to macro-environment and meso-environment analysis (industry environmental analysis). Different enterprises can formulate different strategic goals according to the actual situation and the characteristics of the industry development at different stages, in order to clearly see their position, and even the position of the industry. This analysis method can also be applied to the analysis of other industries, and will not be repeated here.